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EMEA Hotel Investment Activity Up

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EMEA Hotel Investment Activity Up

By - Wednesday 07 March 2012

Investment activity in the hotels sector in the Europe, Middle East and Africa (EMEA) region increased in 2011 compared to the previous year. According to new figures published by Jones Lang LaSalle Hotels, the total amount ploughed into the industry last year stood at 8.1 billion euros (GBP 6.7 billion), a five per cent rise over 2010. One of the most noticeable trends to emerge was that almost two-thirds (60 per cent) of all transactions were for single assets, rather than portfolios, with chief executive officer of continental Europe at the firm Christoph Harle pointing out 78 per cent of all deals were valued at less than 50 million euros.

The UK was the most liquid hotel market in the EMEA region in 2011, accounting for 2.9 billion euros worth of investment, while France and Germany also proved to be popular targets. Jonathan Hubbard, chief executive officer for northern Europe at the organisation, highlighted the higher number of sales conducted as part of debt restructuring strategies, noting this was especially prevalent in the UK and Ireland. However, he added: "Other European markets are predicted to follow suit, due to the mounting pressure from European and governmental institutions on banks to increase their capital ratios."

Looking at the year ahead, the firm is predicting investment volumes in EMEA will be relatively stable, while loan sales are expected to become more prevalent, along with a rise in the number of distressed properties coming on to the market. High-net-worth individuals and sovereign wealth funds are likely to be the most interested parties in property investments in "key gateway cities", with Mr Hubbard highlighting that, during 2011, this trend has had the effect of "widening the pricing gap between primary and secondary assets". Meanwhile, uncertainty over the resolution of the European debt crisis is expected to have a negative impact on investment activity this year.

The outcome of the problems in the eurozone has also affected the performance of hotels at the start of 2012. According to the HotStats European Chain Hotel Market Review January 2012, seven out of the ten cities surveyed experienced a decline in gross operating profit per available room (GOPPAR). Zurich, London and Moscow were the only markets to record a rise in GOPPAR, while hoteliers in Athens saw the biggest decline, with GOPPAR here falling by 119.3 per cent compared to the previous month.

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